The fiscal deficit for 2020 is now 9.4 billion euros, as the Finance Minister reaffirms the promise not to increase income tax in the budget

THE GOVERNMENT HAD a deficit of 9.4 billion euros during the first three quarters of the year, but has said that tax revenues have remained strong despite the Covid-19 pandemic.

The latest Treasury figures come less than two weeks before the next Budget, which according to Finance Minister Paschal Donohoe will be based on the assumption of a Brexit without a trade deal.

In general, tax revenues for the year amounted to 39,570 million euros, 3% less than last year.

This strength is due to a strong January and February and strong corporate taxes that have largely offset the drop in VAT and other excise duties.

VAT was reduced by more than 2.4 billion euros in the year to September, reflecting the dramatic drop in consumer spending.

Donohoe described the figures as a “snapshot of public finances.”

He added that while tax revenues remain strong, the scale of the corporate tax stream cannot be trusted “in the medium term.”

The government aid put in place as a result of the pandemic can be seen in total treasury spending increasing by € 9.6 billion to € 48.1 billion in the first nine months of the year.

Spending on social protection this year alone is forecast at more than € 30 billion.

“This government response reflects the scale of the impact that the pandemic has had on people’s jobs and incomes,” said Public Expenditure Minister Michael McGrath.

Donohoe told reporters this afternoon:

In essence, what has happened in recent months is that the state’s balance sheet intervened to replace private sector spending and labor activity in recent months.

Speaking about the outlook regarding the upcoming Budget 2021, McGrath said the government was anticipating that “a significant portion” of this year’s Covid-19-related spending would be incurred again next year.

Donohoe echoed this, saying that “what’s very different” about next year’s finances is that the government will have to plan for this year’s one-off spending to “see it through” until next.

“Can I give you an impact on what that will mean for our deficit next year? Right now, I honestly can’t, ”Donohoe said.

The Finance Minister has previously indicated that the government is not willing to raise income taxes in the next Budget and reiterated it tonight.

“One of the many reasons that we have been clear from the beginning about Tuesday’s week budget in relation to personal taxes has been the great concern we have that if we were to indicate that there are going to be very imminent tax changes , which would affect people’s spending, “he said.

“What we want to do is give confidence to those who are saving at this rate, confidence to spend, invest and, when our public health guide allows them to do so, use this money in a way that leads to employment grows again.”